The PRC may approve solar contracts, but delay decisions on the remainder of replacement power

AZTEC — The New Mexico Public Regulation Commission may approve Public Service Company of New Mexico entering into contracts to purchase solar energy from arrays that will be built in McKinley County and on Jicarilla Apache land.

These power purchase agreements, which also include battery storage, are part of PNM’s application to replace the power currently provided to customers from the San Juan Generating Station. PNM will be ending its involvement at the coal-fired power plant in the summer of 2022.

The two solar projects will not fully replace the San Juan Generating Station, but the PRC will likely delay making a decision on the rest of the replacement resources.

The delay will allow the hearing examiners to further examine various issues, including how much generation should be located in Central Consolidated School District and what sources of generation should be approved. It will also examine if PNM’s request for proposals process was fair.

The PRC is scheduled to rule on the solar contracts next week. Those contracts had upcoming deadlines and needed an earlier ruling than other proposed replacement generation sources.

Commissioners expressed concern that the process for finding replacement power contracts did not place enough emphasis on locating generation assets within Central Consolidated School District boundaries.

PRC Chairwoman Theresa Becenti-Aguilar said she is leaning toward reopening the bidding process. She also said she would like Native American owned companies to have the chance to participate in that process.

That could provide Enchant Energy with the opportunity to submit a bid that would allow PNM to purchase power generated by the San Juan Generating Station if Enchant Energy is able to successfully retrofit it with carbon capture technology.

It is unlikely that PNM would accept a power purchase agreement with Enchant Energy, however, because it is looking for more flexible power generation sources, like natural gas, to pair with the renewable generation.

In its current proposal, the utility is asking the PRC to approve seven natural gas units similar to jet engines that would generate 280 megawatts of electricity. Those would be located in the Central Consolidated School District boundaries.

Asking PNM to send out another round of requests for proposals could also result in more renewable sources of electricity, such as solar arrays, being built in San Juan County.

The location of the resources is important because the San Juan Generating Station and its associated mine are the main sources of property tax revenue for CCSD. CCSD relies on property tax revenue to pay bonds and, if the power plant does close, it may struggle to make those bond payments.

"Central Consolidated Schools should be considered a priority, the highest priority," Becenti-Aguilar said at the end of the discussion. "Because that's where the San Juan Generating Station plant is located."

The PRC will meet next week at 9:30 a.m. May 29 using a Zoom-based method.

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

Support local journalism with a digital subscription: http://bit.ly/2I6TU0e